Posts Tagged ‘Irish Economy’

I must admit that I never wanted a dog – It was part of the deal that had Deirdre emigrating from Tralee many moons ago!

“I’ll move to Cork as long as we can get a dog” she declared most definitely.

I agreed to this request in the genuine hope that she would forget about it in time. This strategy worked for about 9 months but unfortunately she did not forget and the day of reckoning finally arrived .. she ganged up on me with Ellen, my daughter and I started to receive emails at work with pictures of “rescue” dogs, each with very sad tales.

I gave in eventually and we made the trip to the West Cork Animal Rescue Centre and chose the poor quiet fella in the corner who already had the name “Bing”. He had short hair – we were told be wouldn’t grow much bigger and that he wouldn’t shed much and true to their word neither came true! He grew to quite a size and he has totally destroyed the house with his light dog hair.

Now, I have eventually grown to love him but he is definitely Deirdre’s dog. He is quite a funny fella and one particular quirk of his is that he loves watching TV – if there is an animal on a programme he gets particularly interested but he likes plenty of other stuff. As I write he is actually glued to the Mel Brooks war movie “To be or not to be” (check out the photo – he has good taste Mel Brooks is hilarious!)

In the 10 years that we have had him I have become quite used to most of what comes with the whole package of having a dog except for … you guessed it, dog mess!

It’s bad enough that the garden is destroyed (grass cutting was always a pain but now it is a very perilous operation) but the worst moments are when we are out walking him and he decides to mortify you in public. To be fair to him he reserves this embarrassing practice for grassy areas but I absolutely cringe when he has his moment of glory (sometimes I think he does it deliberately to me) just as someone is passing by.

They never say anything as they pass but you know exactly what they are thinking as they pass: “Disgusting, and I hope they clean up the mess that their dog has made“. Of course they are right to think this and quite correctly there are laws to back this up.

According to the 1997 litter laws – It is not an offence to allow a dog under your control to foul in a public place, however it is an offence to let your dog foul and fail to remove and dispose of the foul subsequently.

The horrible reality behind this law is that when you walk your dog in public places you must be armed with your little plastic bag and when your precious four legged one decides to do his business then you have some awful business to do. This is one of the most horrible things to do and when it happens I insist that the ownership laws are applied strictly, “Deirdre – He is your dog!”

As horrible as this task is, it makes sense and as law abiding citizens we need to be fully responsible.

Quite simply..it’s your dog, so its your mess and you are expected to clean it up.

For some reason this year always felt like it was going to be one hell of a challenge. I must admit I was really worried about the effect of the budget changes and the reduced disposable income that we all have as a result. While the budget has had the predicted negative affect on the domestic economy a lot of things have changed, which have managed to balance this out.

The most important of these is a genuine attitude shift from people in business who are digging deep and really trying their best to make things happen for themselves. A true fighting spirit and resolve is coming through and people are trying “positive” things in the marketplace. We are at the coal face and are witnessing the uplift first hand – We are really busy with some really exciting new projects and it is all down to people being proactive and trying their best to make it happen. After all who else will do it for you?

So here we are entering the last quarter of the year and we are still standing – I must admit that I had been approaching the year very cautiously and found myself marking each month down as another one survived!

Enough, Enough… We have done well but we need to stop all of this “survival” thinking, and if we were to use a football analogy we have probably been playing a defensive, cautious match like a classic Italian soccer team!

It’s time for the manager to call the captain to the side of the pitch and whisper “You’re a talented team, take off the shackles, enjoy yourself and start playing like Brazil”

I guess a lot of people are finding themselves in a situation today where they just don’t have the funds to pay what they owe.

What do you do when you find yourself in this situation? – how do you deal with it, how do you cope, how do you handle those phone calls, how do you handle the pressure?

Unless you have been in the situation before do you know what to do or how you would react?

Will you avoid all calls and email requests, will you make promises you just can’t keep, will you tell lies about cheques that have been sent or will you take every call and be up front and honest with every single caller as to what the situation is and how you intend sorting it out?

Will you promise your creditor an update within a fixed time period and actually deliver this update?

When you are in this spot more than likely on one hand you are fighting for survival, for solutions while at the same time trying to deal with this mixture of creditors – angry, understanding, patient, worried all demanding their payments.

A number of years back I found myself in this spot – I was selling the business I was a joint partner of, I had my figures done, money in and money owed. The theory was perfect – I would have enough from the proceeds to comfortably settle all monies due and even have a good balance left over!! A fine reward for 12 years of hard work..

A few things went badly wrong (a landlord deliberately delaying the lease assignment for over a year was the main problem, which caused huge problems as we were operating month to month) and I found myself with a significant shortfall – the day I did my tally that awful, sick sinking feeling just took over my body and I broke into a cold sweat realising that I was in a financial hole.

When that awful sick feeling and sheer panic eventually subsided (this stayed with me for at least a week – a dark place to be) I had to start dealing with the situation.

The supplier phone calls ? I could tell you that I took every one as they came in but honestly I couldn’t handle them, I had enough on my plate trying to get my head right and deal with the situation and I just wasn’t able to cope with these calls at the same time. I had never actually dealt with the suppliers directly, which definitely made it easier.

We figured out how much we could pay everyone and Tom took over the job of negotiating with each supplier. I corresponded with all suppliers by fax (I just wasn’t able for the phone calls) and passed on Tom’s details – he took it from there and successfully settled with all of them. The business had dealings with most of these suppliers for over 12 years so I reckoned that they had made plenty from me over the years – either way I could not pay them what I did not have.

This was a horrible time in my life and I’m sure it was quite unpleasant for those my business owed money to – most of these were big multinationals but some were small businesses and I am sure these were quite worried at the time.

Was I honourable? I guess I was in the end but I do know how difficult it was to deal with those calls – for a while I did hide and I did need help to deal with the situation.

My advice for anyone in this tight spot – do what you can but don’t hide, if you need help then ask for it. Stay honourable ..

PS: Thank you Tom – the help you gave me at this time I’ll never forget and it kept me sane!

Walking through the village early in the morning with Bing (the four legged one!) we were met with the unusual sight of a guy approaching us from a distance wearing a white chefs uniform complete with black apron and dragging behind him a big suitcase on wheels and carrying a heavy shoulder bag. We quietly wonder what this guys story is.

Getting closer to the lost chef we make eye contact, nod and greet .. “Good morning”

“Excuse me mate, do you know where the Westfield B&B is?” – He was quite a tall young lad with an English accent.

We had no idea where it was but just had to help him – a quick Google search on the smart phone and a minute later we find the B&B on-line and then call for directions.

In between the Google search and the phone call the young guy explains to us that he is a trainee chef from Sheffield and had just completed his first shift in his new job in a nearby hotel.

He had been booked into the B&B by the hotel if he could just find it!

The poor guy looked lost, lonely and totally out of sorts.

It turns out he had dragged his heavy bags in the wrong direction from the B&B, but it didn’t matter as the B&B landlady informs us that there was a cancellation by a guest of the hotel where he was working and he needed to head back and stay there instead.

He politely thanked us for the help, crossed the road and started slowly making his way back to the hotel.

Working away from home – it is a long and lonely journey ..

To the lost chef from Sheffield, all the other young people looking for work away from home, our sons and our daughters – take care out there, wherever your journey takes you..

While it would seem like a terrible way to celebrate 75 years (On May 27th 1936 Aer Lingus launched its first ever flight between Baldonnel and Bristol, with just five passengers) for me it would be the best possible news to come from our famous airline.

Do you remember the days when flying was a treat and when the smiling hostess would genuinely look after each of the customers with water, orange juice and peanuts?

In so many businesses the level of service has increased but in the airline business the exact opposite has happened with a horrible race to the bottom. The level of service has reduced to such an extent that air travel is now a right pain in the backside.

Aer Lingus seem to be caught in no man’s land trying to compete with the “Low Care” airline Ryanair – I honestly get really cross when I hear people waxing lyrical about the great businessman, Michael O’Leary who proudly boasts about his brand of lousy customer service. While they might make record profits (€401M in the last 12 months), Michael will use every situation and every trick to squeeze a bob out of you – listening to jingles on board selling tickets is not my idea of a good time!

When we plan holidays it will never be to a route serviced by a Ryanair flight – plenty don’t mind so who am I to argue? I don’t want to travel with anyone who values customers in such a way.

Tickets for Ryanair charity anyone?

So, Aer Lingus – go for it … bring back the peanuts, that extra little bit of customer service, take a premium on the price and stop chasing Ryanair to the bottom.

In my accounting days (yes, I know most of you won’t believe it – I was!!) we had a few different ways of looking at the costs of a business.

The most popular of these was a very simple analysis – Fixed Costs, which were those costs that would not vary with volume and Variable Costs, which were the costs which did vary according to volume. This was quite a simplistic model, which didn’t always hold up!

We then had other methods of looking at costs such as Zero Base Costing and Activity Based Costing .. interesting stuff indeed!

Since the recession has kicked in I have witnessed first hand clients being advised to cut back on expenses by the accounting fraternity and often they just do it themselves automatically – the types of costs that get chopped first are those that are deemed to be “unnecessary”, which will typically include marketing & advertising spend, sales reps, items like training, corporate entertainment, Christmas gifts, staff entertainment and other “extras”.

On the surface it is easy to figure out why companies would cut back in such a way but you could ask the question: Why spend this money when sales were easier to come by and when it is harder to win business you just abandon them?

Could reduced sales be a self fulfilling prophecy when you cut out certain overheads?

The New Cost Model

Taking the knowledge of my old profession and combining this with what I am witnessing with clients every day I am now proposing a new way of analysing costs.

Here goes ..

There are actually three types of costs:

Negative Costs – these are the costs that a business is “stuck” with, regardless of volume. It would include Rent and Rates (but not necessarily 100% of these – I will explain that later), Insurance, ESB, etc.

Maintenance Costs – these are the costs of servicing the business that you have brought in. It would such items as staff costs, raw materials, power and delivery costs.

Positive Costs – these are the costs that are all about bringing new business in, effectively the costs, which should have a “positive effect” on the business.

Positive costs are the most important costs of the whole business, they are the elements that are designed to start the engine, the elements that can make things happen, that “trigger” customers to actually place an order.

Positive costs are far reaching and could include surprise elements that you would not expect: the premium you pay to have a premises in a location that will bring in more customers, the cost of washing the car after it has been serviced, the cost of polishing the shoes that have been repaired, the cost of having a receptionist who answers calls promptly and deals with customer queries swiftly.

There could be an element of positive costs to most people overhead in the business – the porter who does “meet and greet” at the door of the hotel, the credit controller who carefully spends time with customers who are experiencing difficulty, the accountant who spends time with customers to understand the business better, the staff party to reward a hard working team and a deliberate initiative to improve morale.

I’m sure with a little effort you will think of thousands of other unexpected examples – all of these elements contribute to bringing in more business and create a “positive effect” on the business.

Positive costs are absolutely essential for generating business for any company – cutting these out may be viewed as a necessary step but it will eventually choke the oxygen of the business.

Recession (or any time for that matter)

Using our new cost model I would suggest the following approach:

Analyse your costs into the different cost categories and work towards –

1. Reducing the negative costs as much as possible

2. Improving efficiencies and work practices so that maintenance costs are as little as possible

3. Spending as much of your overhead budget as possible on positive costs .

I am not for one minute suggesting naive spending – always look for the best value in your positive costs and don’t waste money, making sure they are actually positive costs – that the spend results in increases in business.

In business all the marketers will tell you about the importance of having a Unique Selling Point, a USP. It is that element that is unique that makes your business special and makes you different to your competitors. In a busy marketplace that can be hard to achieve. In the current climate it can be even more difficult as everyone is afraid of mistakes so we end up playing it very safe, even boring at times.

Now go back to my first paragraph, read it again and then read further on and let’s discover a really simple way to make your business stand out this Easter.

Here goes..

This Easter draw a secret line around your business and make it a haven for all those who enter or deal with over the phone or on email – you are going to give them a gift, something that is quite unique, something that are not getting in most other places. When anyone crosses that secret line they are going to experience nothing but positivity – yep, that’s right simple positivity.

That’s all well and good but how do we do it? – Here is my 10 step plan!

1. Yourself – You start! ( “Good morning, Greg”)

2. Your Team – Tell them that negative talk is banned, you want them cheery and bright with customers – watch what happens (have a negative jar instead of a swear jar!)

3. Bright – You want to see bright merchandise in the windows, bright visuals on your website, bright stock in the stock list, bright clothes on the staff. Buy flowers!

4. Sales – Increase your sales targets. We all know it’s not easy but tell the team you are budgeting for an increase (let everyone else do the opposite, prepare for the negative it and it will definitely happen)

5. How to? – Ok, while you are positive you are also realistic. You want positive plans from your team as to how the sales targets will be achieved

6. Bonus – Promise bonuses for those who succeed, win/win if you make it

7. What to do with that bonus? – Get everyone in the team to write on a piece of paper what they will do with their bonus (put their private responses in an envelope with their name on it – keep it for them)

8. Drinks/dinner/chocolates/coffee – When the sales plans are done and the bonuses are decided on do something as a team. Bring chocolates or buns into work.

9. Customers – treat them really nice, offer them coffee, offer them biscuits. Tell them about the secret line if you have to – they will think you are nuts but they will appreciate it

10. The World – little enough that you can do about the other stuff, keep it outside the line!

These are not my words they are his – one of those broken men who is picking himself up again..

“Speaking as what you term a “broken man” – I lost everything, dreams out of the window, in debt up to my ears – it took a couple of years to get things back on an even keel and begin to accept the loss but, having done it once, I couldn’t imagine working for someone else again. Working now on a new project with confidence having taken a knock but with my vision and determination intact……..maybe not broken, perhaps just wounded!”

In he bounded about two years ago full of energy, enthusiasm and little bit of arrogance but full of confidence.

His plan was to launch a brand new product in a sector that he reckoned was totally under serviced but one that was growing in interest and importance. He was fully convinced about the viability of this project and needed our help to design and launch it in the marketplace. We were swept along by this guys enthusiasm and everyone in the team got behind the new project – it was really exciting.

The new product did come out, probably at the worst possible time – in the middle of 2009 when no one was taking a chance on anything new. Despite his enthusiasm and powers of persuasion the revenue targets were badly missed.

The product sold well in outlets where it was given a chance on the shelves but in most others it was returned within the week! That often happens with new products that battle for space on the retailers shelves. Product feedback was really superb by the few who actually managed to get their hands on it.

A second variant of the product was planned but never saw the light of day ..insufficient funds (funds were never an issue at the start of the project!)

Fast forward to 2011 ..

We did manage to get a few quid off what was owed to Fuzion but there was still a really large sum outstanding. I guessed the phone call would be a waste of time but in any case it had to be made..

..no answer, he’s probably not up to the conversation – can’t be easy. Two minutes later I get a call back and we have a really good chat.

His other business ventures had also ceased (construction sector), he didn’t have money for me just now but promised to pay when fortunes improved. His mortgage payments have slipped by a few months and he was now job hunting. There is nothing here for him he reckoned .. his preferred destination is Australia but he wouldn’t get a work visa so he guessed he would end up in Abu Dhabi. This would be difficult as he has two young kids.

He is a broken man, his world is in tatters – he is not the only one I have met recently.

The truth is this broken man is an entrepreneur, someone who is willing to take a chance, someone who will make things happen. Sometimes things go wrong but often they go right and they end up employing people and service providers in the process.

In Ireland we need the broken man now more than ever – if you meet him give him a break and encourage him to get on his feet again.